AS Tallinna Vesi´s financial results for the 3rd quarter of 2020

AS Tallinna Vesi’s sales revenue for the third quarter of 2020 were €13.28 million, showing a decrease of 19.5% compared to the same period last year. This was caused by the reduced tariffs and lower commercial consumption resulting from the coronavirus outbreak. Nevertheless, we have seen a partial increase in commercial consumption during the third quarter compared to the second quarter, which hopefully signals a partial recovery.

Sales to private customers in the main service area decreased by 23.8% to €4.90 million, due to the reduced tariffs. The impact of reduced tariffs was partly balanced by higher consumption of apartment blocks, which is the largest private customer segment of the Company. This was the result of the coronavirus, as large number of people worked from home also during the 3^rd quarter.

In the main service area, the sales revenue from commercial customers dropped by 29.8% to €3.71 million, which was mainly attributable to 18% less consumption and reduced tariffs. In the commercial customer segment, the hospitality sector has seen the greatest impact from the pandemic, resulting in reduced consumption. However, the 3^rd quarter saw some increase in commercial consumption compared to the 2nd quarter, which hopefully indicates a partial recovery from the effects of coronavirus.

The gross profit for the 3rd quarter of 2020 was €5.80 million, showing a 35% decrease mostly due to lower sales revenues. The operating profit was €5.77 million, lower by €1.75 million year-on-year. Besides the negative changes in tariffs and consumption, the operating profit was positively impacted by €1.2 million reduction in the provision, formed for possible third-party claims, which was also reduced in the 2nd quarter.

The net profit for the 3rd quarter of 2020 was €5.64 million, showing a decrease of 23.1% compared to the same period last year. In addition to the changes in the operating profit, the net profit was positively affected by lower interest costs.

Coronavirus also affected the sale of construction services, because a number of new developments in Tallinn were postponed. In the 3rd quarter, the subsidiary Watercom continued the delivery of large projects in Tallinn and elsewhere in Estonia, which had been awarded in 2019. The construction revenue reduced by 17.3% or €0.36 million compared to the same period last year. The decrease in revenues was mainly attributable to reduced revenues from construction services, which were partly offset by higher revenues from road construction.

The Company has just reviewed its dividend policy for going forward. ASTV aims to distribute 50%-80% of the annual profit as dividends. Dividend payments shall be assessed annually considering ASTV’s earnings, investment needs, liquidity position and long-term financial objectives.

MAIN FINANCIAL INDICATORS

Gross profit margin – Gross profit / Net sales

Operating profit before depreciation and amortisation – Operating profit + depreciation and amortisation

Operating profit before depreciation and amortisation margin – Operating profit before depreciation and amortisation / Net sales

Operating profit margin – Operating profit / Net sales

Net profit margin – Net profit / Net sales

ROA – Net profit / Average Total assets for the period

Debt to Total capital employed – Total liabilities / Total capital employed

ROE – Net profit / Average Total equity for the period

Current ratio – Current assets / Current liabilities

Quick ratio – (Current assets – Stocks) / Current liabilities

Payout ratio - Total Dividends per annum/ Total Net Income per annum

Main business – water services related activities, excl. connections profit and government grants, construction services, doubtful debt

Karl Heino Brookes

Chairman of the Management Board

Attachment